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Telkom’s 8ta loses interconnect battle

February 14, 2011

Telkom’s cellphone division, 8ta, is evaluating all options after losing an application to allow it to charge rival cellphone companies Vodacom, Cell C and MTN higher interconnection fees to receive their calls on its network.

Telkom said last week that it was “currently studying the rulings and considering their potential implications, and evaluating all options available to it”.

The complaints and compliance committee at the Independent Communications Authority of SA (Icasa) had received complaints from Vodacom, MTN and Cell C last year after they individually disputed agreements 8ta proposed prior to its launch in October last year.

8ta and its rivals eventually reverted to the standard industry rate of 89c a minute. 8ta initially wanted to charge its peers 93c a minute while it was prepared to pay them 89c.

Icasa was finalising new interconnection regulations at the time and has backdated its ruling on 8ta to October 28, when new interconnection agreements came into effect.

Under the new regulations, interconnect fees are expected to drop to 65c a minute from the beginning of next month.

The regulations provide that new entrants such as 8ta may charge higher (asymmetric) interconnect charges than Vodacom and MTN, which could allow Telkom an opportunity to restate its case to Icasa.

“8ta will request Icasa to be permitted to do so. Until then the current interconnection agreements remain in force,” Telkom said.

“Telkom is studying the rulings and considering their potential implications and evaluating all options available to it.”

Sanlam Investment Management senior equity analyst Andrew Kingston said the interconnection rates would not affect 8ta in the longer term, but rather in the short term while it aims to build up customers and craft an effective pricing strategy.

8ta would pay out more in interconnect fees than it receives. “It does impact them. Most of the traffic is on the other operator’s network,” said Kingston.

Icasa spokesman Paseka Maleka said in terms of the Implementation of Asymmetry documents published on January 28, “no licensee has an automatic right to charge an asymmetric wholesale call termination rate.

“Licensees not required to comply with the price control are able to charge a higher termination rate.”